JetBlue is staring down a nasty jet fuel shock this quarter, telling investors on Monday that surging prices tied to the widening Iran conflict have blown up its second-quarter fuel bill and forced the airline to hike near-term cost forecasts while leaning on fares and capacity shifts to protect its margins. Even so, the carrier says it still plans to claw back roughly 40% of that extra fuel hit in the quarter by reshaping hiring and how much it flies.
In a fresh regulatory filing, JetBlue said it now expects fuel to run $4.26 to $4.36 per gallon in the second quarter, compared with an earlier range of $4.13 to $4.28. At the same time, it nudged its revenue-per-available-seat-mile guidance up to 9% to 12% and trimmed its planned capital spending. The filing also notes the airline expects to "recapture 40% or more of increased fuel costs in the quarter" as it adjusts pricing and capacity, according to JetBlue's investor update.
Fuel Shock Chokes Carriers
Jet fuel has not been kind to airlines this spring. Global refinery averages have jumped sharply, with the International Air Transport Association's Jet Fuel Price Monitor showing prices spiking in May and pushing per-barrel and per-gallon costs well above winter levels. That rapid swing has left carriers scrambling to bolt on surcharges and rework fares, according to IATA.
What JetBlue Is Doing
JetBlue had already yanked its full-year outlook in April and warned investors it would respond by slowing hiring, trimming unproductive capacity and raising fares in select markets to soften the blow from higher fuel. Those moves were flagged on its earnings call and in investor materials, as summarized by Reuters.
Wall Street Reaction
Wall Street did not exactly cheer the update. JetBlue shares slid in early trading after the new forecast, with reports pegging the drop at roughly 9% on the day, according to MarketScreener. Some analysts highlighted that JetBlue has been picking up business on routes vacated by Spirit, particularly in Fort Lauderdale, which they see as a partial offset to the cost squeeze. That view came through in an earnings call transcript quoting Raymond James analyst Savanthi Syth on the carrier's network outperformance, as shown in an analyst call transcript.
Why It Matters Here
For travelers in New York and Florida, all of this likely shows up where it hurts most: at the checkout screen. JetBlue's strategy could mean higher fares on some summer routes and tweaked schedules as it rebalances capacity across its key cities. We previously covered JetBlue's push into Fort Lauderdale after Spirit's troubles in a look at its Fort Lauderdale turf grab.
